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Investors send legal notice to Franklin demanding refund

, ET Bureau|
Last Updated: May 22, 2020, 08.45 AM IST

Summary Delhi-based investors allege mismanagement in 6 wound-up schemes; AMC denies wrongdoing

Sebi on Wednesday allowed listing of units of these six schemes, giving investors an alternative route to access liquidity.
Mumbai: Several Delhi-based investors have sent a legal notice to Franklin Templeton Asset Management Company (AMC), its trustees and the US-listed Franklin Resources Inc, demanding refund of their entire investment at re-determined net asset value (NAV) within a week, and to withdraw the winding up notices of six investment schemes.

Franklin Templeton unitholders Kaj Associates LLP, Ultra Walls and Floors LLP and Satyam Jain through their counsel Puneet Jain said in the notice that the AMC mismanaged funds of ₹31,000 crore, which has adversely affected a large number of investors, and that the winding-up is intended to defraud them of thousands of crores of rupees.

Franklin Templeton shut six debt schemes with total assets under management of ₹25,856 crore on April 23, owing to severe illiquidity and redemption pressures caused by the Covid-19 pandemic. Sebi on Wednesday allowed listing of units of these six schemes, giving investors an alternative route to access liquidity.

However, investors are demanding a Special Purpose Vehicle or Alternate Investment Fund funded by Franklin Templeton Inc., the AMC or any other company, transferring all securities and the borrowings made by the six schemes at re-determined NAV dated April 23 from which the funds of the unitholders be refunded.

The investors want to restore the value of all unlisted and untraded securities at face value (representing the amount loaned and interest accrued thereon) to determine the real dues of the unitholders as on April 23.

In an emailed response, a Franklin Templeton spokesperson denied allegations of illegality, wrongdoing or misrepresentation. “We continue to follow due process, both in making investment decisions and in the winding up of these schemes. We have acted in the best interest of our investors and in accordance with all regulations,” the spokesperson said.

The other demand is to withdraw all actions undertaken for electronic registration of unitholders to conduct meetings through video conference or any other electronic medium. They said that such processes were illegal and not permissible under the SEBI (Mutual Fund) Regulations, 1996. The legal notice has alleged that the sponsor, trustees and the AMC are acting in concert and in collusion when the trustees ought to be representing the unitholders.

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